What Is Your Exit Strategy?

Why building something customers love is not the same as building something acquirers need

Last week, The Marzetti Company announced a definitive agreement to acquire Bachan’s for $400M, with the transaction expected to close before Marzetti’s fiscal year end on June 30, 2026.¹

Simple Food Ventures was one of four institutional investors on the Bachan’s cap table, but this is not a victory lap. It’s a case study. Not in how to build a beloved brand, but in how exits in food and beverage are actually earned.

Entrepreneurs are motivated by all types of incentives. Professional investors, however, have only one. Every investment decision ultimately resolves to a single outcome: returning capital at an attractive rate.

To be a competitive investor is to raise capital and deploy it in a way that returns cash more reliably and more predictably than other strategies available to limited partners. If you are a founder raising institutional money, this incentive structure is not optional. It is foundational. And understanding it starts and ends with monetization.

An exit is not the reward for building a great product. It is the byproduct of solving a specific strategic acquirer’s constraint with economics that scale.

The market reality founders need to internalize

A brief history lesson helps frame where we are today.

Venture capital has always depended on two things: value appreciation and speed. In earlier eras, companies scaled as fast as physical infrastructure, regional distribution, and manufacturing capacity allowed. Brands like Ford, McDonald’s, and Coca-Cola grew into billion-dollar enterprises, but they did so over decades.

Technology changed that constraint. As distribution, communication, and customer access became faster and more global, the rate at which companies could scale accelerated dramatically. By the early 2000s, companies in certain sectors could reach nine-figure revenue in under a decade. By 2015, it was difficult to find an industry that could not, at least in theory, produce venture-like returns.

On a deal-by-deal basis, venture delivered exactly what it promised. Extraordinary outcomes became visible, repeatable, and aspirational. Capital followed.

But currently, venture operates under a highly scrutinized, somewhat unfavorable lens from the capital-allocation community. The problem is not that venture fails to create value, far from it. The problem is that value is only realized when companies monetize, and over the past few years, monetization has not kept pace with capital deployment.

The chart above shows U.S. venture dollars deployed since 2014 alongside annual venture distributions as a percentage of net asset value. Between 2004 and 2014, roughly $283B was invested into venture. Between 2014 and 2024, that figure increased more than thirteenfold.⁹ What did not increase proportionally was cash returned.

Despite record deployment between 2020 and 2024, distributions as a share of assets under management have fallen to historically low levels. Rolling three-year DPI metrics sit meaningfully below prior periods.³ ⁴ Markets are cyclical, and distributions naturally fluctuate. But the magnitude of capital deployed over the past five years raises a more structural question: can the market realistically support the level of monetization required to satisfy the volume of investment that has flowed into venture?

That question matters because it changes investor behavior and by proxy, founders’ access to growth capital.

Lower distributions reduce the amount of capital LPs have available to recommit to fund managers. That, in turn, constrains fund formation, tightens underwriting standards, and places hyper-scrutiny not only on value appreciation but on how a company can realistically be monetized. Outside of the typical underwriting return metrics, the number one consideration that professional venture investors should be asking themselves is: what are the concrete steps (and duration) necessary in order for me to return capital off of this investment?

If you have not thought deeply about monetization, now is the time to start.

“Exit strategy” is one of the most misunderstood phrases in company building. An exit is not a button you push at the end. It is something you grow into over time. And today, the gap between companies that can succeed and companies that can be acquired has never been wider.

The real constraint is not execution. It is trajectory.

Why trajectory is the constraint

In food and beverage, the vast majority of monetization occurs through M&A. That makes understanding strategic acquirers, not hypothetical buyers, but actual balance-sheet deployers, the critical lens for exit planning.

Most scaled food companies are not broken. They are operationally disciplined, cash-generative, and capable of managing complexity at scale. Many have been doing so for decades.

Their problem is not competence. It is trajectory.

Growth for large consumer strategics is often driven by pricing, mix, or merchandising optimization rather than sustained volume expansion or structurally improving customer acquisition. In other words, they can repackage and reprice products for an aging customer base, but that growth rarely comes from net-new consumers with compounding lifetime value.

Take Campbell’s Soup as an example. A quintessential New Deal-era grocery staple that struggled to generate durable organic growth leading into the turn of the 21st century.

The chart above shows Campbell’s trailing five-year revenue growth over the past three decades. What it reveals is long-term stagnation punctuated by episodic acceleration. Those inflection points are not coincidental. They align closely with periods of acquisition-driven portfolio transformation, including Bolthouse Farms (Juices and carrots, 2012), Plum Organics (2013, Organic baby food), Kelsen Group (Danish baked snacks, 2013), Garden Fresh Gourmet (Salsa and hummus, 2015), Pacific Foods (Organic broth and soup, 2017), Snyder’s-Lance (Kettle and Cape Cod chips, 2018), and Sovos Brands (Rao’s Homemade sauce, 2024).

This pattern is not unique to Campbell’s. Over long time horizons and across cycles, median revenue growth for large food and beverage portfolios tends to anchor near nominal GDP, roughly 3% – 4%.⁶

Compared with technology strategics, food and beverage companies lack compounding slope. They are durable, profitable, and strategically constrained at the same time.

This structural reality is being amplified by a generational transfer of spending power. Millennials and Gen Z now represent the fastest-growing share of grocery buyers and exhibit meaningfully different behavior. In practice, they show less default loyalty to incumbent brands, switching more readily in pursuit of products that feel culturally relevant, cleaner, or better tasting. When trust is earned, however, loyalty can be deep and long-lasting.⁷ ⁸

For legacy portfolios, this creates tension. Retention among older cohorts remains strong, but acquisition among younger cohorts is slower and noisier. Growth increasingly relies on price realization, while margin structures become harder to defend.

This is the conundrum strategics face. And it is precisely where M&A becomes the lever.

What the market is signaling before acquisitions ever happen

It is important to be clear about one thing: strategic acquirers do not have unlimited capital for M&A. In food and beverage and broader CPG, most strategics are capital-constrained, not capital-abundant.

The chart above estimates available acquisition capital as the sum of cash and short-term investments plus incremental debt capacity under conservative leverage assumptions, net of required operating liquidity buffers. These figures are illustrative and do not represent acquisition budgets, but they do capture balance-sheet reality.

Only a small number of strategics can comfortably execute large, clean, balance-sheet-funded acquisitions. For most, writing a large, ten-figure check outright is the exception, not the norm.

Even where capital exists, it must be evaluated relative to enterprise scale.

For most food and beverage strategics, net deployable acquisition capital represents only a mid-single-digit percentage of market capitalization. That constraint shapes deal size, structure, and frequency.

As a result, the immediately accessible opportunity set for many strategics consists of tuck-ins, earn-out-heavy structures, staged acquisitions, and deals that can be absorbed over time through free cash flow rather than upfront balance-sheet deployment.

Before leaning into acquisitions, strategics are almost always forced to focus on strengthening the base business: SKU rationalization, portfolio pruning, supply-chain optimization, and margin expansion. These actions are not defensive. They are preparatory. This can be seen in real time, with companies like Kellanova, Keurig Dr. Pepper, and Kraft Heinz announcing divestitures and reorganizations to increase profitability and strengthen balance sheets.

Profit optimization creates time and flexibility. It does not, on its own, change trajectory.

Why buying momentum beats building it

Why not build growth internally?

Internal innovation can work. The issue is not possibility. It is probability and efficiency. From a board or CFO perspective, incubating growth internally involves long timelines, uncertain outcomes, and customer acquisition economics that are difficult to underwrite.

Acquiring a brand with validated economics changes that equation.

Strategics are not buying growth at all costs. They are buying momentum paired with margin integrity, strong customer lifetime value, and efficient access to new consumer cohorts. At its core, trajectory is a function of five things: customer acquisition efficiency, retention, margin durability at scale, capital intensity, and cultural relevance.

Bachan’s cleared that filter.

Why Bachan’s won in the BBQ sauce market

Bachan’s did not invent a new category. It entered the U.S. BBQ sauce market, one of the most established and durable subcategories in the sauce aisle.

BBQ sauce represents a roughly $2B–$3B domestic market in terms of production revenue.⁶ It benefits from high household penetration, strong repeat behavior, and a concentrated set of legacy brands. That durability is precisely what makes it attractive to strategic acquirers.

The opportunity was not that consumers stopped buying BBQ sauce, but Bachan’s miraculously resurrected demand. It was that consumers, mostly younger ones, were less engaged with incumbent brands than prior cohorts. They continued to participate in the category, but with weaker attachment. When presented with something more compelling, they shifted.

Rather than offering another iteration of the same use case, Bachan’s delivered a familiar end use with a meaningfully different proposition. It functioned as a complementary staple for some households and a replacement for others.

For Marzetti, the appeal was straightforward: Bachan’s delivered customer acquisition momentum with economics that could scale efficiently across an existing sauce platform.

Why one deal rarely changes the math

Marzetti reported quarterly net sales of $518M for the quarter ending December 31, 2025, which annualizes to roughly $2.1B.² At that scale, even meaningful acquisitions must be evaluated not by headline price, but by their ability to move enterprise-level growth.

Let’s go back to Campbell’s. The chart above pairs a normalized acquisition-flexibility index with trailing five-year revenue growth. It shows that acquisition capacity is episodic, constrained by leverage, liquidity, and scale, and that even well-timed acquisitions are absorbed by the gravity of a large, slow-growing base.

This is why one acquisition rarely changes the math. A single deal, even a good one, is diluted by enterprise scale. Only a sustained program of economically sound acquisitions can meaningfully alter trajectory, and only if each asset compounds rather than dilutes margins, attention, or operating focus.

For founders, the implication is straightforward but uncomfortable. An exit is not earned by building something people love in the abstract. It is earned by building something a specific acquirer can absorb, finance, and scale without breaking its own system.

The companies that get acquired are not the loudest or the fastest. They are the ones that change the buyer’s math.

What this means for founders

Monetization pathways in food and beverage are more defined than in many industries today, largely because strategics face real urgency to reshape portfolios. But defined pathways do not guarantee outcomes.

There is no “we’ll sell when the time is right” switch. Selling your company is often harder than scaling it, and far less in your control.

You have to grow into the strategic positioning that supports an acquisition.

In today’s market, where capital is scarce, acquisition flexibility is tight and more than 30,000 CPG companies are started each year, success requires deliberate choices from day one: category selection, margin structure at scale, customer acquisition efficiency, retention, and cultural relevance that creates durable brand pull.

Bachan’s worked because it combined growth, profitability, and compounding demand inside a massive category that could absorb it.

That combination is what gets bought.

Closing thoughts

For professionals in consumer, the evidence is increasingly sobering. A massive amount of venture capital is chasing a relatively small and finite set of monetization opportunities. Whether the industry can ultimately support returns at a level that continues to justify incremental capital allocation at the current scale remains an open question.

What is clear is that large, incumbent strategics need acquisitions to continue growing and performing. And where that need exists, so does opportunity.

Poppi sold to Pepsi for $1.9B last year, but was valued at just $1.6M on Shark Tank in 2018, when it raised $400,000 for a 25% stake. Even assuming 70% dilution over time, that represents roughly a 375x gross multiple on a seven-year hold.

You would be hard-pressed to find another sector with comparable return potential and equally defined monetization pathways. For founders and investors who understand how to solve real portfolio constraints, consumer remains a space where entrepreneurial access is still high, and where effort can translate into genuine venture-scale outcomes. There is money to be made, but it is earned, not assumed.

The pace of change facing today’s incumbents only heightens that urgency. While the shift from Boomers to Millennials was meaningful, it is modest compared to the rate of change driven by Gen Z and the cohorts that follow. Preferences evolve faster, loyalty is harder to earn, and relevance decays more quickly. For large food and beverage companies, adaptation is no longer episodic. It is continuous and increasingly complex.

For founders raising institutional capital, this has a simple implication: be prepared to explain your exit strategy. A list of potential acquirers is not a strategy. A real exit strategy starts with identifying a large strategic initiative that needs change, understanding precisely where its growth has stalled, and building something that can realistically be absorbed – financially, operationally, and culturally.

Enterprise value is not theoretical. It is constrained by the buyer’s balance sheet, its growth requirements, and its alternative uses of capital. Those constraints shape who gets bought, when, and at what price.

In a tighter capital environment, the companies that win will not be the loudest or the fastest. They will be the ones that change the math, sustainably.

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1. The Marzetti Company Acquisition Announcement
2. Marzetti Quarterly Financial Report (Q2 2026 / Dec 31 2025)
3. Cambridge Associates Venture Capital Index (Benchmarks)
4. PitchBook–NVCA Venture Monitor
5. Campbell Soup Company Annual Reports & 10-Ks
6. IBISWorld Market Research, BBQ Sauce Production in the US
7. McKinsey Consumer Insights (Consumer & CPG Sector)
8. NielsenIQ Consumer Research, Bursting with New Products
9. NVCA Venture Monitor Archive (All Quarterly Reports)